While Vietcombank and VietinBank have proposed to lift the foreign ownership ratio ceiling to 35 to 40 percent to satisfy requirements of the Basel II Accord, ABBank and SCB want higher foreign ownership ratios (49 percent and over 50 percent) to speed up the restructuring process.
Merging banks was the first choice to restructure weak credit institutions in the State Bank of Vietnam’s project in 2011-2015. However, analysts said that M&A may not be a major method for restructuring for a few reasons.
First, cross-ownership is no longer a problem. Second, there are not many more banks which can admit other banks. Analysts said that, in fact, the State Bank bought the commercial banks at a loss because the value of the banks were lower than zero.
The analysts also pointed out that the shareholders of Vietcombank and VietinBank, which the State Bank asked to take management of the ‘zero dong banks’, may not be satisfied with the State Bank’s decision, because banks will now have to share their resources with ‘zero dong banks.' As such, since the M&A and ‘zero dong bank’ solutions can no longer be applied, raising the foreign ownership ratio ceiling is a good alternative. Vietnamese banks have been attractive to foreign investors. However, they still are hesitating to pour capital into the banks because of the limited foreign ownership ratio.
